Heads to get £25bn in Clarke shake-up

Charles Clarke, the Education Secretary, is preparing to bypass local education authorities and give £25 billion straight to head teachers, it was disclosed last night.

In a move to prevent a repetition of this year's funding crisis, money will be channelled straight into school budgets through a national funding agency instead of being dispensed by councils.

The Education Department said it was considering "radical plans" in response to the financial turmoil in which an increase of 11.6 per cent in Government funding has been undermined by claims that £500 million has been withheld by council leaders.

Civil servants have been ordered by Mr Clarke to prepare the way for the new funding system. This would affect all 25,000 schools in England and Wales, according to the Times, which also claimed that the scheme had Downing Street backing.

The move would result in schools being grant maintained, a policy introduced by the Conservatives and later abolished by Labour.